Over four in five landlords (81%) make improvements on every property they add to their portfolio, new research by Paragon Bank has indicated.
The findings suggested that 22% of landlords spend over £25,000 on upgrading a new portfolio property, with 18% spending between £10,000 and £20,000.
Paragon’s research, which surveyed over 500 landlords, revealed that on average, landlords expect to see a 19.8% increase in the property’s value after completing upgrade work, with a 16.5% increase in expected rental income.
The findings also showed that 40% of landlords prefer to purchase property in need of refurbishment, with 21% opting for properties that are ready for tenants to move into.
In 2008, 44% of homes in the sector were defined as non-decent according to the government’s English Housing Survey. This figure now stands at 23%, and Paragon’s analysis also suggested the addition of good quality homes has diluted the presence of poorer stock. In 2008, 1.8 million privately rented homes were classed as decent, a total that has risen to 3.3 million by 2021 – an 83% increase.
There has also been a reduction in the number of properties classed as non-decent – falling from 1.4 million to 990,000, a fall worth 29%.
“Landlords have helped improve standards across the private rented sector over the past 15 years and the upgrading of stock they purchase is central to that,” commented Paragon managing director of mortgages, Richard Rowntree.
Asked why landlords make improvements to property, 83% of landlords said they did so to ensure they are providing a good quality home to tenants, with 82% doing so to make the property more attractive to tenants.
Two thirds (66%) said they upgrade property to improve rental income, 57% said they look to increase the capital value, while 47% cited that they upgrade property for energy efficiency reasons.
Rowntree added: “The vast majority of landlords will look to upgrade each new property to boost the capital value and the potential rental income. However, they also do this out of a genuine desire to provide a good quality home to their tenants.”
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